- Stresses statutory instrument for Fingal County Councilas noise regulator
- Asked about second airport at Gormanston by Padraig O Ceidigh
Dublin airport’s chia designate Basil Geoghegan stressed the importance of the north runway and said that it was one of the reasons he applied for the job when he spoke to the Oireachtas Transport Committee. He said that while Cork airport may or may not be profitable in any one period but we need to make sure it is providing a return on that capital over the longer period. Transcript below:
Chairman: The purpose of our meeting is to hear from the chairpersons designate, their approach to undertaking the role of chairperson and their vision for the company. I welcome Ms Fiona Ross, chairperson designate of CIÉ and Mr Basil Geoghegan, chairperson designate of DAA.
Basil Geoghegan: During my career I have spent a lot of time advising companies in the broad aviation sector. My clients have included private aviation companies such as Pembroke Capital in Ireland and Fairchild-Dornier and public companies such as Rolls-Royce and BAE Systems. Those roles have spanned placing equity for companies such as Avolon and Ryanair and raising debt for IAG and Garuda. In Ireland, I advised the Department of Transport, Tourism and Sport, and later NewERA, on ownership options for Aer Lingus. I also defended Aer Lingus from two takeover bids launched by Ryanair. I have been a director of the Irish Aviation Authority, IAA, since 2012, a position which has given me further understanding of the Irish aviation sector, and particularly the challenges of developing operations, the new air traffic control tower and the new runway at Dublin Airport. My intention is to step down from the IAA board before taking up my role with the DAA. I was involved for more than 12 years in the Ireland Funds of Great Britain, including several years as its chair. I led, with others, the Forgotten Irish Campaign to assist the vulnerable and elderly Irish community in Britain. We focused particularly on helping the survivors of institutional abuse who now live in Britain, especially women from the Magdalen laundries. I was honoured to do that work and to support those women. In terms of my past roles, the educational experience that I have received is far more of a help than a hindrance. I have advised a number of airlines that were sometimes in complete opposition to one another yet I have managed to work on one side and then on another side at a later point. The focus on giving good advice is really what has enabled that and I hope that is the type of advice that I will be able to drive through the board of the DAA.
My reasons for applying for the role as chairman of DAA are straightforward. First, DAA plays an increasingly vital role in the Irish economy. Dublin and Cork airports are essential connections with the global economy upon which Ireland depends, but on which we have also built our strength. Aside from its two Irish airports, DAA is also something of a hidden Irish multinational. Its travel retail business Aer Rianta International, ARI, manages stores in 12 countries on four continents that collectively employ approximately 3,000 people and have a combined turnover of more than $1 bn per year. The group also manages Terminal 5 at King Khalid International Airport in Riyadh, Saudi Arabia through its DAA international subsidiary. To put this in context, Terminal 5 is about the same size as Terminal 2 in Dublin, so it is a sizeable business in its own right. While Dublin and Cork airports welcomed almost 32m passengers in 2017, DAA’s overall business provided services to more than 135m passengers last year, through its airports, airport management contracts and retail outlets. The financial impact of DAA to the State is also important. Dublin Airport supports and facilitates €8.3 bn worth of economic activity which is equivalent to more than 3pc of Ireland’s GDP. Cork Airport supports and facilitates a further €727m of economic activity, which equates to 2.2pc of the total south west economy.
My second reason for applying for the position was the national importance of developing the north runway… From our perspective, it would be particularly helpful if we could move forward in parallel with both the legislation and to give Fingal County Council, which has been established as the regulator, the funding and basis upon which it can set itself up. That would ensure it is immediately up and running and prevent having to come at this situation following a delay.I understand that there is a significant cross-departmental effort to move the primary legislation forward and that the intention is to have it enacted by the end of the year. What is equally important, but which grabs fewer headlines than primary legislation, is the statutory instrument that would enable Fingal County Council to be set up as noise regulator and to carry out all the work it needs to do in terms of funding, personnel, expertise and all of the usual things that a regulator needs to do. From the time I have spent on the board of the IAA, I have seen that running a regulator is not an inconsequential matter, particularly if one has not done so before. This one is being started ab initio. That is my understanding at the moment.
On the third terminal, Departments can cover many issues and I understand that the runway is one, that what happens in the context of the terminal is another and that there are many other issues which will be before the Department. In respect of the third terminal, the question of whether one is needed is interesting. On the other hand, it is not really about terminals. The issues at Dublin Airport, other than building a new runway, are actually stands, gates, taxiways, and the ability to move aircraft around efficiently. That actually has very little to do with a terminal. A terminal is where people arrive, get processed and move through. In fact, using terminal capacity in the correct sense of the term, there is a huge amount of terminal capacity at Dublin Airport. As I said, it is more about the infrastructure of stands, gates and taxiways. That is important
There is a big effort on behalf of the DAA, with the local Cork management team, the development council around the airport and with local people in the region – both people in the community and business people – to try to drive traffic through the [Cork] airport. We are absolutely focused on doing that. Cork is the second biggest airport in the State. That cannot be gainsaid.
Sen Pádraig Ó Céidigh: What are the witnesses’ views on a second Dublin airport in Gormanston or elsewhere? Dublin Airport has 30m passengers and does not have the capacity to cope with growth similar to that of the past five years. Most European capital cities have at least two airports, in particular cities to which more than 25m people travel by air. I would value the witnesses’ opinions on that issue.
Basil Geoghegan: On Cork Airport, as raised by Senator Ó Céidigh and Deputy O’Keeffe, we agree that it needs an active strategy for developing its business. That is nothing to do with its being part of the DAA. Rather, it needs an active strategy because there are several airports nearby, including Shannon and Kerry, which can compete hard for business. Cork Airport is also in the unusual position of having good road infrastructure to Dublin. Ultimately, we have to get passengers to use it and persuade airlines to develop routes from it.
On the profitability point, the right way to look at this is that whenever infrastructure is in place for a long period of time, it may or may not be profitable in any one period but we need to make sure it is providing a return on that capital over the longer period. I do not have all of the figures to hand but I am happy to have a further discussion or provide the committee with the information. That is how we need to look at Cork Airport developing over a longer period.
I will pick up on the related point about transatlantic connectivity with Norwegian. It was a significant win to get the Norwegian flights to Providence. We were disappointed because, within DAA, we are a direct financial beneficiary of Norwegian running those flights. We want the airline to run more flights with more passengers every day. In the context of airline practice, a route is often started and it is a bit difficult in the beginning or it can be run during the tourist season but not in the off-season. I believe Norwegian has indicated that it will run again after the winter season but I need to confirm that. We see it developing and then, as passengers know the route is there, it will become easier to run during the winter season as well. We are focussed on that and it is important to us.
Under the national aviation policy, there is a review of the ownership of the airports every five years and I believe that comes up again next year. We will leave that to the Department and, ultimately, our shareholder to decide what they want to do. For as long as we own Cork Airport, we will do everything we can to make sure more flights and more passengers go through that part of our business. The other point on the runway is that I am here from a DAA perspective to try to make sure that if we are going to spend a significant money to develop a runway, we want to operate it for the betterment of our passengers, our airline customers and the State. That is why we are pushing hard on the legislation. The Minister has not imposed any of these planning conditions; they were set down previously. This is about looking forward and making sure we are a small, flexible, efficient country. Let us do it right. We have seen the development of runways in other parts of Europe which have been difficult.
That might be a lead-in to the Senator’s question on a second airport. The discussion about aviation infrastructure is interesting. We need to focus on the runway and what we are doing in developing the gate and stand capacity. Within what we have responsibility for, we have capacity well into the 2040s if we can develop it correctly. There will then be another discussion as to whether another terminal is needed. I would hate to have to build a new airport near any European capital city these days given the restrictions.
In respect of Brexit, the issue not only for the DAA but for Ireland is the weakness of sterling against the euro has reduced the number of passengers coming from UK provincial airports. We have seen an increase in passengers from London as some UK firms may be relocating to Dublin, which has seen more people wanting to fly from London to Ireland. There is an issue in respect of the economic growth of the UK and its impact on Ireland. Generally speaking, if Brexit happens, on whatever terms and at whatever time, there will be an element of detachment of the UK from Ireland. I never heard any reference to any tactical use of Cork by Norwegian or anyone else so I do not believe it is the case.